3,300 Inland Jobs To Go

Steel Company Posts A $191 Million 4th-period Loss

January 17, 1992|By John N. Maclean.

Inland Steel Industries Inc. announced Thursday it will eliminate approximately 3,300 jobs over the next two years, mostly at the massive Indiana Harbor works at East Chicago, in an effort to staunch heavy losses.

The announcement was part of an earnings report that showed a loss of $191 million, or $6.44 a share, for the fourth quarter of 1991. That brought Inland`s total loss for 1991 to $275 million, or $9.88 a share.

The latest quarter`s deficit includes a charge of $215 million, or $165 million after taxes, to handle cuts of about 25 percent in the work force and to write down closure of ``uneconomic facilities`` at Indiana Harbor, including a majority of the company`s coke batteries.

Excluding the $165 million after-tax writeoff, the fourth-quarter loss was $26 million, or $1.11 a share, an improvement over the year before. In 1990, Inland lost $57 million for the same period, or $2.05 a share.

The full-year result before the restructuring provision was a loss of $110 million or $4.55 a share, which compares with a $21 million loss, or $1.41 per share, in 1990.

``1991 was a year of many negatives, which we are glad to have behind us,`` said Frank W. Luerssen, Inland`s chairman and chief executive officer.

``The recession sharply reduced shipment to the consumer durables markets, and prices weakened across much of our product line. Steel prices in nominal terms stood at 1981 levels, and in real terms were down more than 30 percent over the decade. Moreover, costs, particularly those related to our steel labor contract, are high and continue to rise.``

Inland`s announcement was the second jolt to the regional steel industry this month, following the disclosure last Thursday by USX Corp. that it will shut down U.S. Steel`s South Works plant, once Chicago`s largest employer.

All major integrated-steel companies, meaning those that make steel from the raw materials of iron ore, limestone and coke, are undergoing

difficulties. They are experiencing a variety of factors including labor problems, increased competition from smaller domestic mills as well as mills abroad and a failure to invest in research and development.

Inland indicated last spring the company would have to undergo a restructuring, but did not indicate how broad it would be. At the time, Inland said it would seek the voluntary retirement of 350 white-collar workers and indicated other steps were contemplated.

A general reorganization began in 1990, when the company broke its distribution group into five divisions and four geographic units. Company officials said they were attempting to operate in smaller, more responsive units.

Jack H. Morris, Inland`s director of corporate communications, said the company hasn`t decided which jobs will be eliminated, but that the

headquarters staff in Chicago, which numbers 140, should expect the same percentage cut as the Indiana Harbor work force, which numbers about 13,000.

Luerssen said the company will be ``reviewing every aspect of our business to bring costs in line with today`s realities.``

He said the company has accomplished some things this year that bode well for the future.

``We took positive steps during the year to improve our cash flow and financial flexibility; our capital program is largely behind us, and our new facilities are performing well. We are confident that we will reap significant benefits from our modernization and restructuring programs when the next upturn in steel orders materializes.``

Last fall, the company opened the final lines of a $1.1 billion cold-rolling and galvanizing mill it owns with Nippon Steel Co., the largest U.S.-Japanese joint venture to date. The venture, I/N Tech and I/N Kote, turns out high-quality steel for the Japanese auto industry in this country and other customers.

About 60 percent, or $130 million, of Inland`s $215 million writeoff is due to expected costs of reducing the labor force, the company said. The additional 40 percent, or $85 million, is due to writeoffs of assets. That includes a majority of Indiana Harbor`s five coke batteries.

Several coke batteries are old and difficult to upgrade to meet Clean Air Act requirements, company officials said. In addition, the company is writing off the ingot mold foundry, which became obsolete when steel operations became entirely continuous cast last year, and two blast furnaces built during World War II.

``We have no illusions that the months ahead are going to be anything but difficult,`` Luerssen said. ``The outlook for steel orders, particularly from the automobile industry, remains weak.

``Nevertheless, we believe that our strategy is correct and that by wringing costs out of the system we will accelerate our return to

profitability.``

The steel segment of Inland narrowed operating losses in the fourth quarter, exclusive of the writeoff, to $18 million from a loss of $68 million in the year-earlier period. Sales declined 4 percent, to $495 million.

Operating profit for the Inland Materials Distribution Group, which includes Joseph T. Ryerson & Son and J.M. Tull Metals, fell 10 percent, to $16 million from $18 million.

The steel service center segment of Inland`s business had a small fourth- quarter profit, compared with a year-earlier loss of $3 million. That 1990 figure included a $3 million restructuring provision.